Implied Probability
What is implied probability? Here is an example, you may have noticed on sites such as oddschecker, a percentage that will always be over ‘100%’ alongside odds for two or three way market sports.
Our examples are coming from football once again here, purely because that’s what I’m most comfortable with. Obviously there are different methods and laws if we are talking about something like Horse Racing or some more individual sports like Snooker, for example. Then again, applying this to Darts is a fantastic, fantastic experiment that breeds success in my opinion.
Let’s say we’ve found ourselves a two way market, such as Draw No Bet, and Manchester City (1.53) are hosting Tottenham Hotspur (2.60).
If we bet £190 on Man City, a loss will return £0 and a win will return £290.
If we bet £100 on Spurs, a loss will return £0 and a win will return £290.
If it’s a draw, we know we take both of our stakes back so we don’t care about that possibility, we only have these two possible outcomes in mind. So, we take the amount we risk and divide it by the total payout to get the implied probability for each outcome:
Man City: £190/£290=.655 or 65.5%
Tottenham: £100/£260=.385 or 38.5%
Now a simple sum tells us that adds up to 104%, in a market we are lead to believe we have a 50% to 50% chance of winning it. That extra 4% goes in favour of the bookmaker who has a built-in edge on every single market you will come across. It’s important to understand that.
It’s more important to understand that when it comes to implied probability, it can be converted to percentage using a simple table even. Here is that very table:
| Decimal Odds | Fractional Odds | Implied Probability |
|---|---|---|
| 1.01 | 1/100 | 99.00% |
| 1.10 | 1/10 | 90.90% |
| 1.25 | 1/4 | 80.00% |
| 1.50 | 1/2 | 66.67% |
| 2.00 | 1/1 | 50.00% |
| 2.10 | 11/10 | 47.62% |
| 2.20 | 6/5 | 45.45% |
| 2.25 | 5/4 | 44.44% |
| 2.38 | 11/8 | 42.11% |
| 2.50 | 6/4 | 40.00% |
| 2.62 | 13/8 | 38.10% |
| 2.75 | 7/4 | 36.36% |
| 2.88 | 15/8 | 34.78% |
| 3.00 | 2/1 | 33.33% |
| 3.25 | 9/4 | 30.77% |
| 3.50 | 5/2 | 28.57% |
| 3.75 | 11/4 | 26.67% |
| 4.00 | 3/1 | 25.00% |
| 4.33 | 10/3 | 23.08% |
| 4.50 | 7/2 | 22.22% |
| 5.00 | 4/1 | 20.00% |
| 5.50 | 9/2 | 18.18% |
| 6.00 | 5/1 | 16.67% |
| 6.50 | 11/2 | 15.38% |
| 7.00 | 6/1 | 14.29% |
| 7.50 | 13/2 | 13.33% |
| 8.00 | 7/1 | 12.50% |
| 8.50 | 15/2 | 11.76% |
| 9.00 | 8/1 | 11.11% |
| 9.50 | 17/2 | 10.53% |
| 10.00 | 9/1 | 10.00% |
| 11.00 | 10/1 | 9.09% |
| 12.00 | 11/1 | 8.33% |
| 13.00 | 12/1 | 7.69% |
| 15.00 | 14/1 | 6.67% |
| 17.00 | 16/1 | 5.88% |
| 19.00 | 18/1 | 5.26% |
| 21.00 | 20/1 | 4.76% |
| 23.00 | 22/1 | 4.35% |
| 26.00 | 25/1 | 3.85% |
| 29.00 | 28/1 | 3.45% |
| 34.00 | 33/1 | 2.94% |
| 41.00 | 40/1 | 2.44% |
| 51.00 | 50/1 | 1.96% |
| 67.00 | 66/1 | 1.49% |
| 81.00 | 80/1 | 1.23% |
| 101.00 | 100/1 | 0.99% |
Let’s use an upcoming Premier League game as an example that demonstrates exactly why betting on football is about betting on good value, and not betting on winners alone. I know it’s hard, but to bet on value you sometimes have to eliminate who is or isn’t the better team and look at a game from a pure, statistical point of view.
In our example here, Everton hosted Liverpool on Monday, 19th December. And the odds were as follows: Everton 4.00, Draw 3.75, Liverpool 1.90. Based on the odds, bookmakers are telling us that the probability of an Everton win is 25%, the draw is 26.67% and Liverpool 52.63%. Again, that adds up to 104.3%, so we can see that bookmaker edge.
It also tells that Liverpool winning the game, in a three-way market, is a 50-50 toss-up. There’s in fact a better chance of Liverpool winning than Everton winning or drawing, if we are to believe the bookmakers.
If we look at Liverpool’s away form, we can see they’ve won five of their nine away games, which gives us a 55% win rate. That’s somewhat in keeping with what the bookmakers are telling us, right?
If we look at Everton’s home form, we can see that they’ve not lost a single game at home this season. They’ve won four of eight which gives us a 50% win rate, already 25% more than what the bookmakers are telling us, but we could always look to the Asian handicap here and believe we have created a solid bet. If we want to bet on value, then we’ve established Everton are a much likelier winner than the odds are telling us. We can assume there’s value.
We will of course naturally want to consider the fact that we see Liverpool as a better team, but they have to lose at some stage this season, so why not today? This is only looking at implied probability and how to use that in the simplest of forms, but even the example we’ve just looked at is enough to justify a small bet on Everton with the chance of a greater return.
Now there are methods and there is math to go into much greater detail here, but we don’t want to do that. We’re covering the basics of some need to know things here with the hope that it not only immediately improves your basic level of knowledge, but it entices you to go out there and improve your understanding as much as possible, to educate yourself, and to give yourself the best possible chance of taking away their edge and creating your own!
